Tesla: More Pain Likely Ahead

DT Invest
2.6K Followers
(11min)

Summary

  • Tesla's $631 billion market capitalization is not justified, as my intrinsic value calculations suggest a $50 fair share price.
  • Overvaluation might not have been an issue in the current bullish market if the company had continued to demonstrate the same revenue growth and profitability levels as during the pandemic.
  • However, Tesla's global market share is diminishing notably, and even price discounts are not helping.
  • In addition to declining revenues, Tesla's profitability profile is also rapidly deteriorating.

Tesla Signage at Delivery Front Entrance

baileystock

My thesis

The fact that Tesla's (NASDAQ:TSLA) market capitalization is multiple times higher than its intrinsic value means that the stock and Elon Musk have a huge fan base believing in long-term growth potential.

My intrinsic value calculations

This article was written by

DT Invest
2.6K Followers
As an investor who started my path five years ago with my own capital, I represent a blend of hands on experience and academic background in corporate finance. Due to my relatively young age I thrive on discovering long-duration growth opportunities and actively seek out opportunities that align with my risk-taker mindset. In addition to my appetite for growth, I also understand the importance of balancing the portfolio with low-volatility dividend-playing names to be a well-rounded investor. In my analysis I prefer to rely on fundamentals with the business and strategic perspectives the most important in my opinion. As a person with the financial background I also pay attention on a company's financial performance and how intrinsic value of the stock looks compared to its price in real life. This does not mean that I am seeking deep discounts, but what I am looking is high-quality names with reasonable valuations. My experience as an investor taught me that if something is excessively cheap there are potentially numerous reasons for it and it is better to stay away from deep discounts. I invite readers to subscribe and follow my analysis because I am focusing on high-quality names, which does not necessarily mean only well-known companies but also potential new stars capable of delivering exponential share price growth over the long distance.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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